Turo Host Taxes in Michigan - 2026 Guide

Updated for 2026 (Filing 2025 Taxes)

Tax Essentials for Turo Hosts in Michigan

Sharing your vehicle on Turo provides a flexible income stream, but navigating the tax implications as a Michigan resident requires careful attention. Revenue generated through Turo is considered self-employment income, subject to both federal and state taxes.

The IRS requires Turo hosts to report their earnings on Schedule C (Profit or Loss From Business) with Form 1040. This income is also subject to self-employment tax, which covers both Social Security and Medicare taxes. Platforms like Turo do not withhold these taxes, meaning hosts are responsible for calculating and paying them directly to the IRS, typically through estimated tax payments throughout the year.

How Michigan Handles Gig Worker Taxes

As a resident of Michigan, you are required to file a state income tax return, even if your only income is from Turo. Michigan operates under a flat income tax rate, currently at 4.05% for the 2025 tax year. This means all taxable income is taxed at the same rate. Turo income, reported on your federal Schedule C, flows to your Michigan income tax return. Self-employed individuals in Michigan typically use Form MI-1040, along with Schedule 1 (Adjustments to Income) and Schedule SE (Self-Employment Tax) to calculate their state tax liability. Michigan also requires you to pay estimated taxes if you expect to owe $500 or more in state income tax. Failure to do so may result in penalties. It's important to note that Michigan does not offer a specific deduction for the federal self-employment tax paid, but it is deductible when calculating your adjusted gross income for federal purposes, which then impacts your Michigan taxable income. Michigan's Department of Treasury provides resources and forms online, and it's recommended to consult their website for the most up-to-date information and filing instructions. Remember to keep meticulous records of all income and expenses related to your Turo business to ensure accurate reporting and maximize potential deductions.

Top Tax Deductions for Michigan Drivers

• Standard Mileage: The most popular deduction for Turo hosts. The 2025 rate is 70 cents per mile. Given Michigan's diverse terrain and potential for longer trips to destinations like the Upper Peninsula, this rate can significantly reduce your tax burden.
• Tolls & Parking: While Michigan doesn't have extensive toll roads, any tolls incurred during Turo trips are deductible. Parking fees directly related to vehicle rentals are also deductible.
• Phone & Data Plan: If you use your phone for Turo-related communication (scheduling, messaging renters), you can deduct the percentage of your phone bill attributable to business use.
• Vehicle-Related Costs: Expenses like car wash supplies, air fresheners, phone mounts for renters, and even small amenities offered to improve the rental experience are deductible.

Key Warning: You cannot deduct both the standard mileage rate and actual car expenses like gas, oil changes, or repairs in the same year. Choose the method that yields the greater deduction.

Understanding the 15.3% Self-Employment Tax

This tax comprises two components: 12.4% for Social Security and 2.9% for Medicare. Because Turo and other gig platforms do not withhold these taxes, it is the host’s responsibility to calculate and remit them to the IRS, typically through quarterly estimated tax payments. The 15.3% applies to net earnings – your Turo income minus your deductible business expenses – exceeding $400.